We are all living longer-which is terrific news. Longevity has some huge advantages--a second career, seeing grandchildren grow up, opportunities to enjoy precious time with family and friends. A non-smoking 65-year-old woman has a 50% chance of living until she’s 88—and her male counterpart could easily live to 85. As outlined in a recent Kiplinger article, “Are You Ready for Longevity? 4 Steps to Take Now,”, the longer you live, the longer you are likely to live.
However, longevity does bring some challenges which have to be addressed. Here are a few:
Have a plan for long-term care. For married couples, it’s likely that one of the two will end up in an assisted living or nursing home. It is important to consider how you’ll manage to pay for that, long before you’ll need it. If you can purchase a long-term care insurance policy, while you are still healthy enough to qualify, you won’t need to use up all the household’s money to pay for the care. Long-term care insurance usually pays for both skilled nursing home care and in-home care. These policies can be just as important for single individuals who will need to hire caregivers, especially if staying at home is important to you.
Traditional long-term care policies can be expensive. However, insurance companies have created hybrid policies that combine long-term care benefits with life insurance or other investment products. These products take away the worry that you will pay premiums and get nothing back.
It is important to consider housing and care options before you are in a crisis. There are experienced professionals who can help with downsizing, home modification, care and facility options and financing care. It is important to plan ahead and know what options are available before you need them.
Plan for incapacity. You’ll need to have a medical advance directive, including a health care proxy and instruction directive, so someone can step in and make medical decisions on your behalf.
If you become incompetent and don’t have a medical advance directive in place, your family might need to go to court to get legal authority to make those decisions.
The same holds true for financial decisions. You’ll need a power of attorney, so someone else can sign on your behalf and access your accounts. This should be a trusted individual who will look out for you and your family.
Legacy Planning. Having an estate plan in place eases the burden on loved ones when you pass. If you have no immediate family, it is especially important to appoint a funeral agent and executor to administer your estate. Your plan should include having some accounts that are POD or Payable on Death, so funds can be accessed right away for funeral and other immediate expenses. Your estate planning attorney can help you plan for children, grandchildren, charities you care about and even your pets.
Don’t forget tax planning. New Jersey eliminated its estate tax but an inheritance tax remains. In addition, there are many income tax ramifications of estate and long term care planning that a knowledgeable attorney can advise you on.